The benefits of electronic payables (also known as electronic accounts payable or EAP) have been widely reported, but maybe it is still unclear if, or how, these solutions can help your organization. Setting aside demographics like size, I view internal culture as a key indicator, concluding there are three types of organizations for which ePayables can add value for different reasons. Based on the following, where does your organization fit? Answering this question can help you create an appropriate ePayables business case to sell management on the idea.
Savvy organizations actively focus on electronic payments, and establish effective policies and procedures to support their goal. In a perfect world, everyone would be in this category.
As a complement to traditional Purchasing Cards, ePayables act as a bridge to new territory for card program expansion and the purchases typically not allowed on a P-Card. Advantages over ACH payments include the ability for organizations to:
- better manage cash flow (e.g., consolidated monthly payments to the card/solution provider versus individual payments to each supplier)
- earn revenue share
Some organizations, driven by fear, are still reluctant to implement a traditional P-Card program or only use P-Cards on a very limited basis. They favor checks and remain skeptical about electronic payments. ePayables might appeal to them on a psychological level. Management can take comfort in how ePayables support an invoice-based purchase-to-pay (P2P) process like they have always used and simply mean a change in payment method.
A few years ago, I would have been disappointed in a push limited to ePayables when an organization is not using P-Cards well or at all. However, I am now convinced that, if an ePayables solution can be the bridge for moving an organization forward and away from cumbersome checks, then it signifies progress, even if all else remains the same. Down the road, they might be more open to the powerful combination of ePayables and P-Cards.
Last week, I wrote about an end-user organization lacking in accountability, where employees and management alike use P-Cards to conduct wasteful shopping sprees (access the post). The discouraged program manager, for good reason, is not interested in expanding their P-Card program. It is a cringe-worthy example of how lax management can sabotage an organization. ePayables can provide a bridge back to better organization control over spending.
What About “None of the Above?”
Finally, there are organizations who have determined no need for ePayables because traditional cards work well for them for all kinds of purchases. They have already minimized checks and achieved P2P process efficiencies, so they are savvy as-is. To these organizations I say: Keep it up and continue to evaluate your P2P processes for improvement opportunities.
Does your organization need help developing a payment strategy including ePayables and traditional Purchasing Cards? Contact Recharged Education today.
About the Author
Blog post author Lynn Larson, CPCP, is the founder of Recharged Education. With more than 15 years of Commercial Card experience, her mission is to make industry education readily accessible to all. Learn more…
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